The Disclosure Pilot Scheme (“DPS”), which can be found in Practice Direction 51U (“PD 51U”), introduced some new terms into the litigation lexicon. The interpretation and scope of these terms has been developed by case law over the past 18 months. In this article, Mike McCabe looks at two recent judgments that provide helpful guidance about two of these terms: known adverse documents (“KADs”) and narrative documents.

Known adverse documents

Although the obligation to disclose documents that adversely affect one’s case was incumbent upon parties under Civil Procedure Rule (“CPR”) Part 31 (the disclosure rules that previously applied to matters in the Business and Property Courts), the concept of treating such documents differently to other documents is novel to the DPS. As such, the ambit of KADs has been litigated a number of times since the DPS was introduced on 1 January 2019.

As discussed in detail in Stewarts’ article earlier this year, the timing of disclosure of KADs required clarification by the Disclosure Working Group (“DWG”) as it was a recurring source of dispute between parties. Paragraphs 3.1(2) and 8.3 of PD 51U refer to a “continuing obligation” to disclose KADs that arises once proceedings have commenced. However, the DWG confirmed that the reference points for the timing of disclosure of KADs under the different disclosure models should be taken from paragraphs 9.1 and 9.2 of PD 51U. The nature of the “continuing obligation” to disclose KADs has been developed further in the Castle Water judgment discussed below.

Castle Water Limited v Thames Water Utilities Limited [2020] EWHC 1374 (TCC)

What documents are “known” to a party?

PD 51U makes clear that a party has a duty to disclose KADs once proceedings have commenced unless they are privileged.

Paragraph 2 of PD 51U unpacks the term KADs word-by-word. A “known” document is one of which a party is “actually aware (without undertaking any further search for documents than it has already undertaken or caused to be undertaken)”. The judgment of Mr Justice Stuart-Smith in this case shows the court adopting a broad and purposive interpretation of how parties are expected to identify documents of which they are “actually aware” without needing to undertake “further search[es]”.

PD 51U provides that the awareness of companies is attributed to employees with “conduct of the proceedings” or those who had “accountability or responsibility” for the relevant events. In relation to persons who have since left the company, PD 51U states that companies must “take reasonable steps to check” with such persons.

Expanding on these provisions, the judge noted that for complex cases and/or large organisations, parties must engage with people of all levels who would be aware of KADs. Asking only the “leaders or controlling mind of an organisation” about potentially adverse documents would only be appropriate if more junior persons would not be expected to have any relevant information.

What steps must parties take to identify adverse documents that are “known” or of which they are “aware”?

The judgment held parties are required to take “reasonable and proportionate steps to check” for KADs that they have or have had in any context (not just in relation to contacting former employees). The intention is to prevent parties from knowingly omitting to check a place or source that they knew or suspected would yield documents which they would rather avoid disclosing at an early stage. If any such documents exist, parties must take “reasonable and proportionate steps to locate them”.

To illustrate this point, Mr Justice Stuart-Smith used the example of a party who knew it had an adverse document but did not know for certain whether it was in the left-hand or right-hand drawer and therefore did not locate it. To permit such an approach would, in the eyes of the court, be absurd.

The judge confirmed that this language reflects the tenor of the judgment of the Chancellor of the High Court, Sir Geoffrey Vos, in UTB LLC v Sheffield United Limited [2019] EWHC 914 (Ch), which described the DPS as “driven by reasonableness and proportionality”. Mr Justice Stuart-Smith further explained that any interpretation that did not impose an obligation on parties to carry out checks and then take steps to locate KADs would be a “rogue’s charter” and render the requirement to disclose KADs “emasculated”.

The judge maintained that this interpretation draws a “clear distinction” between what parties are required to do, and what they are not. Further case law on this subject will explore this distinction.

How do parties fulfil their “continuing” obligation to disclose KADs?

The judgment makes clear that provided a party conducts appropriate checks when proceedings are commenced, and the pleaded issues are settled, their initial obligation to disclose KADs will have been discharged. A party would only be obligated to revisit such checks and consider where KADs might be located if circumstances materially changed, such as if amendments to the pleadings introduced new issues for disclosure. It would be “unduly onerous” to expect parties to regularly conduct checks for KADs in order to fulfil their “continuing” duty. As with the continuing obligation of disclosure under CPR 31.11, if a party becomes aware of adverse documents after its initial checks and disclosure, it is under an obligation to disclose them, including if that awareness arises in the course of searches directed by the court.

Narrative documents

“Narrative documents” is another novel concept with which lawyers and judges have been grappling since the introduction of the DPS.

Bouygues (UK) Ltd v Sharpfibre Ltd [2020] EWHC 1309 (TCC)

The key questions considered in this case were:

1. how to devise a means of accurately identifying narrative documents; and
2.  whether it was proportionate to order such a process to be undertaken having regard to the burden on the disclosing party as well as the likely value of such documents if they existed.

The definition, set out in Appendix 1 of the DPS, states that narrative documents are “relevant only to the background or context of material facts or events, and not directly to the Issues for Disclosure”. Under PD 51U, parties must begin the process of agreeing the Issues for Disclosure in the case within weeks of the final statement of case having been served. Perhaps unsurprisingly, this has proved to be a highly adversarial process in many cases.

Identifying narrative documents

In terms of identifying narrative documents, the applicant proposed they should be those documents that fit the definition from Appendix 1 and which were responsive to the searches agreed in the Issues for Disclosure. Practically, such an order would require the third party to apply the same agreed keyword searches, but adjust the review process to identify not only documents that go directly to one of the Issues for Disclosure, but also those relevant for background or context.

Proportionality

The third party from whom narrative disclosure was sought persuaded Mr Roger Ter Haar QC, sitting as a deputy High Court judge, that such an order should only be made in circumstances where there is:

1. a real (not fanciful) prospect that documents existed that were only relevant for background or context of the facts or events of a particular Issue for Disclosure (and were not directly relevant to that issue), but were nonetheless sufficiently important to justify the associated costs of their disclosure; and
2. no likelihood that such documents would be identified by the searches devised for disclosable documents in relation to any other issue (or indeed that issue), as the disclosure order would cover them without the need also to order narrative disclosure.

The judge decided it would be disproportionate to order narrative documents to be disclosed by the third party and indicated that he endorsed those submissions. There were 20 broad Issues for Disclosure in an expansively pleaded case, so ordering disclosure of documents that were not directly relevant to one of those issues would not “assist [the court] in the determination of the issues”.

The judge also stated he saw “strength” in the submission that a building dispute was not likely to be appropriate for narrative disclosure. The respondent argued that a fraud claim involving “secret meetings, obscure processes or hidden participants” would likely provide more fertile ground for an application for narrative disclosure. Ultimately, the applicants failed to persuade the judge that documents of only contextual or background relevance were “necessary for the fair disposal” of the proceedings.

Conclusion

The common theme of the cases discussed above is the need for parties to act reasonably and proportionately. Mr Justice Stuart-Smith described this duty in Castle Water as the “touchstone” of the DPS, a message which is reinforced by Sir Geoffrey Vos in each of his judgments. Parties must also bear in mind his parting remark in McParland v Whitehead [2020] EWHC 298 (Ch) that uncooperative parties who flout these responsibilities for litigation advantage “will face serious adverse costs consequences”.